Outplacement Guide for Senior Executives – 1
This is another piece under Challenge 44 – which is a project to improve my writing in 90 days. This is the first phase and the purpose of this phase is meeting a deadline rather than making remarkable content.
Reduction in Force
By now it was over a year and a half since I started working at GE plant in Singapore. Every morning after buying my coffee from the vendors across the street, I would walk through the first floor of the multi-story manufacturing plant to get to the top floor where the CIO and her team, yours sincerely included, were located. Most people who worked at the plant actually lived in Malaysia, where the cost of living was much lower, and they were bussed in to work at the plant.
Recently I had started to notice that as we were walking through the plant floor there were fewer and fewer people working. Yes, it is very embarrassing for me to acknowledge I didn’t even know what was happening. I was very much into myself, enjoying my job as the mainframe systems programmer for the entire company. I was so lucky. I had interviewed and was hired for this position first by Telex, yes Telex, and finally with a phone call. That’s all it took for GE to hire me and fly me to Singapore, all expenses paid.
Jeffrey, my Taiwanese friend with whom we shared an apartment was much more alert to these issues so one day he persuaded me to go together and talk to the CIO. We mentioned about our worries. It looks that there are less and less workers in the factory, what’s going on? She assured us that we are “staff” and our position is totally secured. Few weeks later events alerted us even more. We were back in Katherine’s office. This time, as we were about to leave the office she said, well since you guys are here on a visa, it wouldn’t hurt, just as a back up to look into other employment opportunities-just to be on the safe side. A week later she called us back in her office. Before she says anything Jeffrey asked Katherine we are not out of a job are we? She looked down and meekly said, Jeffrey, we are all out of a job. Now I was screwed. I had left a very secure job in Thailand in the hope of career advance and now my only option was to either find another company that will hire me, and sponsor my visa, in two weeks, or to leave Singapore for the bright prospect of fighting in the Iran-Iraq war.
Employees are not the only party that are negatively affected by layoffs due to reduction in force (RIF). There are significant risks and negative ramifications for the employers. We will briefly touch on them here and in a later section address the most effective strategies to minimize these risks.
The first and potentially the most common risk is that of litigation initiated by laid off employees. Why was I the one you had to let go? The cost of litigation and the negative publicity that comes along with it is far beyond legal and settlement expenses. As you will see the impact could be long-term and devastating to a company.
At least in the United States laid off salaried employees are entitled to be paid through unemployment insurance, for a period of time that can last as long as six months. But where is this money coming from? Well unemployment insurance which by the way is a major source of potential abuse and fraud is paid by the state where the employee is hired. And where is source of this money that states pays out? Yes, you guessed it right. The taxes levied on an employer. So longer the employees remain on unemployment and more funds drawn, the larger the impact on the taxes company will be paying in the future.
Unless the entire company is being shut down, the company will now be operating with the remaining employee who are justifiably concerned and worried about the prospect of their jobs. There is a good chance that the news of layoff is not going to be only a piece of news to them as many might personally know some of the employees who were laid off. The psychological impact on the remaining employees both out of concern about their own future as well as how their colleagues have been treated is not insignificant and has additional implications for the company.
The mental implications of reduction of morale, by itself, will lead to loss of productivity. In addition, many employees will not be juggling time between doing work and looking up and applying for other jobs. More time spent search other jobs, applying and taking phone screening interviews means even less productivity for the company. And who do you guess would leave the company first? Those employees whose higher level of competency make them more competitive prospects for employment by other companies. So on top of not doing their jobs out of stress of impending unemployment, and the time spent looking for other jobs, the company is not hit by losing their most competent employees and having to carry the weight in even less productive way.
Well when I was being laid off in Singapore there were no Glassdoor for me to put a nasty review for my former employer. And frankly even if there were a Glassdoor, putting a negative review would have been the last thing I would have thought of, a) because of the time in which we were raised, the sense of gratitude for having had a job until then, and b) for what was going to come.
Times have changed. While employees feel less emotionally attached to the employer at the same time there seems to be a stronger sense of entitlement that can only be blamed on the good times and the employers themselves. It’s the supply and demand thing. In good times when employers are desperately looking for resources the only way they can get them is to shore employees with highly competitive benefits. And in the bad times, employees with more accumulated benefits could be the ones at the highest risk.
Anyway, laying off employees as we mentioned before will lead to an impact by the brand due to potential news of layoffs and worse than that litigation and now the public platforms for employees to vent against the employer, while their identity is protected. The risks of being branded as social irresponsible are significant and we will address that next.
Loss of Revenue
More than ever before, consumers and other businesses have the luxury of scrutinizing the companies the do business with. Companies engaging in oversees use of child labor, or those who exploit undocumented employees or those who make destructive impact on the environment can gain the pariah state. Add to that list companies branded as unfair and insensitive to the livelihood and well being of their employees. Who would you rather buy from and do business with. A company that is squeaky clean and charges a bit more or one that carries a black mark and is cheap too. That depends on the situation and but my bet is, as has been proven by numerous facts, statistics, and studies by reputable sources that companies branded as insensitive and socially irresponsible start experiencing the pain in their pockets and their bottom line, further aggravating the financial implications of conditions that brought them to reduce force in the first place.
Challenges in Hiring
If loss of revenue is not bad enough, the next big challenge will be hiring new employees when the economic conditions turn for the better. Glassdoor and numerous other sources will be out there to warn an employee about the poor treatment of former employees at the hand of the company. Your company could become the last one someone would ever consider working for when there are other companies branded as socially responsible, green and other values that may matter more to your prospective employee than the hire pay you are trying to offer to compensate for your poor reputation. Spending enormous amount of money to change your public image can be a consideration but even that can and often backfires. So, what are the options you should seriously consider.
Not only did I never badmouth my former employer, almost thirty years later I am still singing their praise. Because rather than throwing me in the street, GE, with little expense helped me get my next job, all the way back in the United States. That layoff in Singapore turned out to be the best thing that happened to me and for that I am eternally grateful to my former employee. While my story is an extreme in the sense of the positive impact the layoff had in my life, in fact most companies can accomplish similar results, with providing a little help to will lead to quick reemployment of former employees, thus minimizing the impact of unemployment insurance, removing the risk of litigation, and hiring themselves numerous PR ambassadors at no cost.
In most cases what a laid off employee needs most can be broken down to the following:
For many employees who are being laid off it might have been a while since they last looked for a job. They are fearful and uncertain about the prospect of employment and even more nervous about a new world of tools and resources use to seek and gain employment.
This is where a little career coaching, in most case with as little as 6-8 hours can familiarize the employees with the resources they can leverage, become more familiar with the prospect of job opportunities, learn about conventional, and unconventional strategies to employ and finally how to perform in interviews get more offers and successfully negotiate their salaries and benefits with their new employer.
Career Marketing Material
Employers should also provide and assist the laid off employees to develop the very minimum of what someone needs today to succeed in the job market. It comes down to an effective resume and cover letter that best present the employees strengths and what they will be able to offer the new employee and a search engine optimize LinkedIn profile that will help the employee be found by relevant recruiters.
With a little investment in guidance, coaching and marketing material, the employer will minimize their risks and gain themselves and army of well-wishing former employees. In most cases however, employers do not have the inhouse resources to assist employees with these services. That is where an outplacement firm can help. The next article will focus on who to select the outplacement partner that is the best match for your company.